The yet-to-be-named subsidiary will have a full-board headed by a Managing Director, he said. "The benefit of this will be that this company can give focused attention to overseas acquisitions. Also, the parent company will be diluted from liability of overseas assets."

OIL has so far been partnering Indian Oil Corp (IOC), the nation's largest refinery, in its overseas ventures. They had even set up a Mauritius-based special purpose vehicle for overseas acquisition.

He said all future acquisition will be done by the new subsidiary which will be incorporated in due course. "The board has given us permission for the subsidiary. Now work will be initiated."

All overseas assets that OIL currently hold will migrate to the new subsidiary, he added.

The then Oil Minister Mani Shankar Aiyar had encouraged OIL-IOC to go overseas in direct competition with OVL, which he said was not nimble-footed when it came to acquisitions.

The Cabinet in 2005 approved setting up a 50:50 special purpose vehicle of OIL-IOC for overseas activities.

OIL has created a war-chest of $1-1.5 billion for acquisition of discovered or producing mid-sized oil and gas properties in Africa, Central Asia and Russia.

It along with IOC has been looking at certain assets in the US, Africa, Australia, Canada and Central Asia.

"We want to grow inorganically and the new subsidiary will help accelerate efforts for opportunities abroad," Kumar said.

Like OVL, the 100 per cent subsidiary of OIL will be a full-time Managing Director and directors for finance, operations and exploration. It will also have two government nominee directors as well as independent directors.

OIL directors would be special invitee directors on the company board.